When Is a Tender Price Fair in a Squeeze-Out?

Abstract

This article examines the role of bid prices for determining the fair value of securities in a subsequent squeeze-out appraisal. The recent Takeover Directive includes a legal presumption of a fair bid price under certain prescribed conditions. The author seeks to identify circumstances that may be regarded as a sufficient reason to reverse the fairness presumption and deviate from the consideration offered in a bid when determining the squeeze-out price. Theoretical underpinnings of the preconditions are also presented. Particular interest is paid to the question what significance may be given, when determining the fair squeeze-out price, to the consideration offered in such a voluntary bid that fails to gain acceptance by a qualified majority (90 per cent) of securities targeted.